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tv   Nightly Business Report  PBS  December 15, 2011 7:00pm-7:30pm PST

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>> tom: another black eye for blackberry maker research in motion. its latest profits fall 71%. among the problems, unsold playbook tablets. >> susie: then, the market for brand new stocks is heating up. >> issuers and some bankers want to squeeze the deal in for this calendar year for perhaps contractual reasons. >> susie: from today's fashionable initial public offering to the crop for next year, we look at new stock offerings. it's "nightly business report" for thursday, december 15. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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captioning sponsored by wpbt >> tom: good evening and thanks for joining us. investors had raspberries for blackberry maker research in motion. the stock tumbled as much as 8% in after-hours trading, down to its lowest price since 2004 after another earnings disappointment. susie, among the culprits-- a big charge for unsold playbook tablets. >> susie: tom, rimm took a $485 million charge during the quarter related to those unpopular tablets. excluding that charge, rimm earned $1.27 a share in its third quarter, eight cents better than estimates. revenues were down from the year-ago period, coming in at $5.2 billion. >> tom: the company has
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struggled with a series of missteps this year, from network outages to profit warnings, and the debut of that poor selling playbook tablet. all have left investors clamoring for change. there was a time when a blackberry device was mandatory for any serious business person. but then came the iphone from apple and google's android system. roger entner is an analyst with recon analytics. >> roger how does research in motion compete in this smartphone market? >> well, it's very difficult for are rim to compete in the segment. it's products with the blackberry 7 operating system are not competitive against the iphone and android devices. >> how does it get back in the snar smartphone game? >> it needs to launch the
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blackberry 10 devices what was a big disappointment in the earnings call was they said it would take until late 2012 for them to really come to market because of a delay of their intergrated chips. >> we saw the stock prices drop significantly after hour down to its lower since 2004 and lost two-thirds of the value at $15 per share is there any value left? >> there's value left because the businesses are loyal to their blackberries and the international markets where apple and google haven't been able to throw all their weight around are not bad. as apple and going apple with
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its army of device manufacturers are there. blackberry will have the same problems as it has in the suspect u.s. >> apple and google have gotten into the market. does rim need the consumer market at all? couldn't it concentrate on what you call the enterprise market or business market? >> the enterprise market is the target segment for apple and for google. we see more and more of a consumerization of the business segment. employees are coming to the i.t. department on a daily basis and saying why can't i use my iphone like i use my android device on the corporate network and i.t. is running out o of excuses why they can't. >> if have you a 24-month time horizon would you buy shares of rim at this price? >> no, i would not.
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>> any disclosure. are you owning any? >> i do not own any rim shares. >> on research and motion tonight roger entner with us from massachusetts with recon analytics. >> tomorrow is a >> susie: tomorrow will be a big day for zynga. it makes its wall street debut, selling shares to the public for the first time. the social game maker stands to raise a billion dollars. zynga priced 100 million shares at $10 a share. that's at the high end of its range. the stock will trade on the nasdaq under the ticker z-n-g-a. zynga is part of a slew of companies rushing to go public by the end of the year. today, it was designer michael kors, and his shares were the most active issue here on the big board. this is busiest week for i.p.o.s since november 2007. erika miller takes a closer look at what's behind this flurry of activity, and the outlook for the class of 2012.
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>> reporter: michael kors was the height of fashion at the new york stock exchange today. we're not just talking the man, but also his stock. his company strutted down the i.p.o. catwalk, gaining more than 20% in its first day of trading. kors is one of many companies rushing to go public before the end of the year. >> issuers and some bankers want to squeeze the deal in for this calendar year for perhaps contractual reasons, or reasons to get compensated in this current tax year. >> reporter: now, investors are eagerly waiting for tomorrow's debut of zynga, the gaming company behind farmville, mafia wars, and words with friends. zynga is likely to be the biggest internet i.p.o. since google went public in 2004. but darren chervitz, co-manager of the jacob internet fund, is not a fan of the offering. >> certainly, the largest red flag that we see with their strategic and operational plan
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is the fact that they rely almost exclusively for their revenues on facebook. 90-plus percent of their users-- 50 million plus every day, but they almost all come on the facebook platform. it's a big problem for the company. >> reporter: zynga's stock performance tomorrow and in the months ahead will be watched closely on wall street. it's viewed as a barometer for future tech i.p.o.s, most notably facebook, which is expected to go public next year. if facebook does go public, it will be one of the biggest i.p.o.s in history. among the other big names in the pipeline are luxury travel bag maker tumi, organic macaroni and cheese manufacturer annie's, and yelp, a local reviews site. what's interesting is that the i.p.o. pipeline is strong, despite the collapse in the stock prices of high profile offerings like groupon, linked in, and pandora. also below their offering prices are dunkin brands, and hospital owner hca, which was the biggest deal of the year. but some think the class of 2011
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is getting a bum rap. >> if you look, actually, at some of the statistics on earnings reports, a strong majority of these companies have beat expectations. >> reporter: 2012 is expected to be a better year for i.p.o. deals, especially if facebook takes the plunge. a strong market for new issues is not just good for the firms going public; it also means more income for financial firms doing the deals. erika miller, "nightly business report," new york. >> tom: speaking of stock listings, after more than 60 years on the big board, texas instruments will soon have a new trading home. the company announced today its moving its stock listing from the n.y.s.e. to the nasdaq beginning in the new year. so, a new exchange, but the same ticker symbol-- t-x-n. still ahead, another day in the hot seat on capitol hill for former m.f. global c.e.o. jon corzine, with more details about missing client money.
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>> susie: improvement on the jobs front helped stocks move higher. weekly jobless claims fell by 19,000 to their lowest level since may of 2008 with 366,000 workers filing initial claims. that encouraging trend supported stock-- the dow rose 45 points, the nasdaq added just over a point, and the s&p 500 rose nearly four. but despite that positive jobs news, brace yourself for another year of a weak economy and maybe a recession. that's the 2012 forecast from bank of america merrill lynch. here are the highlights: the investment firm expects global economic growth of 3.5%, but here in the u.s., the economy will be weaker, growing less than 2%. and there's a 40% chance of recession in the u.s., and they're predicting a deep recession in europe. the u.s. unemployment rate will stay around 9%, and oil prices will be above $100 a barrel. one of the economists who drafted that report joins us now-- michelle meyer, senior u.s. economist at bank of
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america merrill lynch. >> thanks, susie. nice to be here. >> a lot of people are homing 2012 will be a year of recovery but based on your forecast it doesn't look like that's going to happen. >> a year of recovery but a bumpy one at that and we're concerned about the sovereign crisis developing in europe. we think europe will be in a mild recession next year and the u.s. can avoid a recession as the baseline call but there's clearly downside risks emerging out of what's happening in europe. >> can europe come together and have a solution to their debt crisis so they don't go to recession and impact the global economy? >> i think at this point it's almost inevitable we'll at least see a mild recession in europe early next year. part of the problem in europe is they have a sovereign crisis being driven by too much debt.
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as a result you're seeing a lot of fiscal tightening happening particularly in the peripheral country and that's causing a slow down in growth because you have a lot of austerity and have a credit crunch beginning to evolve as a result of bank deleveraging europe's in a challenging environment and you can see a mild recession and slow growth and avoid a crisis but the risks are skewed to the downside. >> people are are expecting the fed will take a new action in the new year in the form of some stimulus and the so-called qe3 quantitative easing what do you expect them to do and what will it do to the economy. >> they're faced with the economic trajectory with slow growth and sticky high unemployment. we think unemployment will
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remain close to 9% through next year and in that environment especially with the the risk scenarios we think the fed will engage in easing policy and see the qe3 focussing primarily on the housing market and want to buy more mortgages instead of treasuries. >> one of your predictions is that oil will top $100 a barrel. hard to understand given everything you say is a weak economy overseas and here. >> yeah, and understandably it's a nuance forecast wjt#f in the first half of the year you see slow down in oil prices as a result of the slow down in global growth but in the second half of the year as a result of the fed's qe3 track and all the liquidity will push you will oil prices so for the year you end up above $100 a barrel. >> what will break the economic
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cycle so things sort of get back to nor to normal. >> excellent question and it times time for the imbalances to correct and ultimately we'll pull through. the u.s. economy is further along in the adjustment there's a light at the end of the tunnel. >> michelle, thank you for joining us tonight. >> my pleasure. >> we've been speaking with michelle meyers at bank of america merrill lynch >> tom: today marked the end of u.s. military involvement in iraq. in a ceremonial lowering of the u.s. flag and the raising of the iraqi flag, nine years of fighting came to a halt. 4,500 american lives were lost in iraq. the estimated cost to taxpayers is expected to exceed $4 trillion. $800 billion are direct costs of war; another $1 trillion will go to cover care for injured veterans.
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>> susie: more layoffs in the financial sector-- morgan stanley announced plans to cut 1,600 jobs across most of its units in the new year. the layoffs represent nearly 3% of the company's current staff. but morgan stanley says the financial advisors division is expected to escape the pink slips. >> tom: stocks snapped a three day losing streak as the latest and stronger economic data from the u.s. offset the ever-present worries about europe.
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right out of the gate this morning, stocks were able to find more buyers than seller. but the buying interest faded throughout the session. the high for the s&p 500 today came in the first hour of trading. the index ended with a fractional gain. at one point, the dow jones industrial average had a triple- digit gain. but again, the gains faded in the afternoon when the international monetary fund called the global economic outlook quite gloomy. that forecast may help explain the defensive nature of the best sectors today. utilities, health care and consumer staples certainly fit that description. these three led the market gainers, rising at least 1%. the utility sector has been a beneficiary of low interest rates and the volatile markets.
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this exchange traded fund includes the big power company stocks. this year, it's up 12%. with today's better than 1% rally, it is less than a half dollar from a new 52-week high. the convenience of online shopping has been a boom for fed-ex's delivery service this holiday season. on monday, fedex shipped 17 million packages, a company record. that kind of volume comes after a better than expected quarter. profits jumped in its fiscal second quarter to $1.57 per share, a nickel above analyst estimates. the company credits its ground shipping business. the company also delayed taking delivery of some new 777 air freight jets. some analysts had worried fed-ex may have too much air freight capacity with the new plane. it delivered for shareholders today, rising 8%. volume more than quadrupled. still, the stock is down 10% from a year ago. delta shares was another high
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flyer in the transportation business. despite fears of a looming recession in europe, delta said it will be "solidly profitable" next year. management expects capacity cuts will offset higher fuels costs. additionally, the company is banking on growth coming from latin america, particularly brazil. shares gained about 5.5% today on twice their usual volume, but they've lost a third of their value compared to a year ago. some merger activity in technology, this time in semiconductor equipment. lam research will buy novellus systems for just over $3 billion in an all stock deal. based upon last night's close, novellus shareholders could get $44 per share. the stock closed well shy of that figure today, even with the 16% rally. lam research, the buyer, dropped 8%. analysts generally like the deal, calling the company's two areas of focus complimentary. the financial sector was unchanged today, but late today, two separate credit ratings
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agencies raised worries about big u.s. and global banks. standard and poor's said the u.s. banking industry is undergoing "its most radial structural change since the great depression." it said the biggest challenge for banks next year will be constraints on revenue growth. separately, fitch ratings downgraded the credit grades for six global banks, including bank of america and goldman. it's part of fitch's review of ratings. and that's tonight's "market focus." >> susie: clashing stories today on capitol hill as the investigations into m.f. global's collapse continue. cme group chairman terry duffy told house lawmakers about evidence that former m.f. global c.e.o. jon corzine may have known about a loan made with customer funds in the days before the firm's bankruptcy. but corzine stuck to his story that he didn't know about any misuse of customer funds. as darren gersh reports, some attorneys believe him. >> reporter: jon corzine's response to allegations he knew customer funds were transferred to m.f. global's affiliate
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companies was categorical. >> i don't know how to respond to something that somebody said to somebody else to somebody else that is unidentified and i can't speak to. i do know that i never authorized anyone to use customer funds to make a loan or a transfer of funds. i never intended to, nor do i think i said anything that could have been construed to do that. cme group c.e.o. terrence duffy said earlier this week an auditor heard one employee say corzine knew a loan had been made from customer accounts. corzine said money may have been transferred to clear up an overdraft at j.p. morgan. but he insisted the transaction was appropriate. >> the back office in chicago explicitly confirmed to me that the funds were properly transferred. >> reporter: former federal prosecutor jacob frankel was struck by the force of corzine's denial. >> these were absolute, unequivocal denials under oath. and for that reason, i think it
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is believable, even if people do not want to believe it. >> reporter: brokers like m.f. global can borrow from customer funds in some circumstances, but the loans are strictly controlled, and firms must replace customer cash with u.s. treasury securities or other super-safe investments. some members of congress consider that a loophole. >> you actually could legally, under current... not current, under recently passed rules, basically invade those funds of customers and not break any rules doing so. is that an unfair statement? >> it's not an unfair statement... >> reporter: final word on m.f. global will have to wait until the multiple investigations into the firm's failure are done. that's when customers of the failed firm will have a better idea of who knew what and when. darren gersh, "nightly business report," washington. >> susie: here's what we're watching for tomorrow: we'll get the latest on retail inflation with november's
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consumer price index, and darden restaurants reports its latest earnings. also tomorrow, our friday "market monitor" guest says the way to make money in 2012 is to buy stocks with big dividends. rich steinberg will give us five names. you're not alone if you're not done with your holiday shopping. with the christmas countdown on, the national retail federation today upped its holiday sales forecast. the retail trade group now sees sales rising almost 4%, with stores ringing up about $470 billion in merchandise. and based on its surveys with shoppers, it found that, so far, more have spent more on themselves than on gifts for others, and say they still have a lot of shopping to do. >> tom: it's wasn't the holiday greeting 88,000 american airlines employees expected-- a letter today notifying them of potential layoffs. the c.e.o. told employees for the airline to fly out of bankruptcy, it needs to make many tough decisions.
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c.e.o. tom horton said he is certain american will emerge out of bankruptcy, but with fewer employees than it has now. >> susie: when it comes to tax law and your portfolio, there are some arcane rules that can
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have a big impact on the losses you can claim. in tonight's "tax tips" segment, kevin mccormally, executive editor at "kiplinger's personal finance," takes on the wash-sale rule. >> tonight, i want to try to clear up confusion about an arcane tax law that can trip up investors-- the "wash sale" rule. it's easiest to understand if you think about what it's designed to prevent. let's say you own stock that shows a substantial paper loss. although you're convinced the price will recover, you dump the shares, claim a loss to cut your tax bill, and then buy back the stock in hopes of cashing in on the recovery. not so fast. it will work, but only if you wait 30 days to re-buy the shares. otherwise, the i.r.s. will ignore the sale and deny the loss. it sees the deal as a wash, since you wind up with the same stock in your portfolio. although you can't claim the loss on a wash sale, its value is really postponed rather than lost forever. you get to add the amount of the disallowed loss to the tax basis of your newly acquired shares. so the tax benefit of the loss will be resurrected when you
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sell those shares. i bring up the wash-sale rule as part of this series of year-end tips because this is the time of year investors are scouring their portfolios for losses to harvest for their tax returns. remember, you can use capital losses to offset capital gains dollar for dollar, and up to $3,000 of additional loss can be deducted against other kinds of income, such as your salary or retirement plan pay-outs. sure, tax motivations should never be the prime motivation for buying or selling an investment. but the potential tax savings from selling a loser before year-end might be the final piece of evidence you need that its time to rejigger your portfolio. just don't let the wash-sale rule spoil your strategy. i'm kevin mccormally. >> susie: and tomorrow night, kevin joins us live to take your tax questions. >> tom: many of us will do our last minute shopping online, but did you ever wonder what online company gets it there faster? customer service rating firm stella-service ran a test and found people ordering from
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zappos got their packages first, often in just two days., amazon, gap, and dell delivered the goods in three days or less, while toy's r us, hsn and kohl's all took five days or more. the survey also showed that east coasters received their packages only slightly faster than folks on the west coast. >> i'm almost done, tom. >> and i've only just begin, susie. >> oh- >> susie: that's "nightly business report" for thursday, december 15. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:
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